Telefónica achieves a record profit of 9,335 million until September from the operations of O2 and Telxius


Madrid

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Telephone has closed the first nine months of the year with a record profit of 9,335 million euros, impacted by two key operations this year for the teleco chaired by José María Álvarez-Pallete: the capital gains corresponding to the closing of the merger between O2 and Virgin Media in the United Kingdom and the sale of the towers division of Telxius for 7.7 billion in January. On the other hand, the operator has continued between January and September with a strong reduction of financial debt net up to 25,000 million euros. This represents 31.8% less than in September 2020. Similarly, the strong cash generation has been maintained, reaching 2,482 million in the first nine months of the year. Free cash flow in the period was 1,470 million euros.

Only in the third quarter of the year the net profit was 706 million euros. In addition, for the second consecutive quarter, between July and September, both the operator’s income and OIBDA have grown (operating result before depreciation and amortization, the value of which is equal to EBITDA). Specifically, they have increased in organic terms by 3.6% and 1.6%, respectively. In the accumulated for the nine months, both figures have grown by 1.7%. In concrete figures, revenues in the third quarter have fallen by 11.1%, reaching 9,298 million euros, while in the first nine months of the year they have totaled 29,603 million, 8% less. From the teleco they have attributed it to the changes in the perimeter of the company. In this sense, it is important to note that revenues associated with broadband connectivity added, the services that go beyond this increase by 3.8 percentage points during the last 12 months and are already 71% of the service revenues.

For his part, Third quarter OIBDA it has increased by 39.8% in reported terms to 3,734 million euros, more than double between January and September to 20,620 million euros. In this growth, Telefónicia has pointed out, the efficiencies and the cost control applied, as well as the operations closed this year, influence.

If we look by markets, four priority markets of the operator (Spain, Germany, Brazil and the United Kingdom) they have been the origin of 78% of the teleco’s income. Specifically, Spain has provided 29% of the turnover; Germany 18%; Brazil 16% and the United Kingdom 15%. Outside of these, Telefónica Hispam stands out, which has contributed 19% of the billing.

Strong cash generation and less debt

On the other hand, Telefónica has continued with an important cash generation, which reaches 2,482 million euros in the nine months of the year. Including spectrum payments, the free cash flow stands at 1,470 million.

On the other hand, the net financial debt Telefónica has continued to decline significantly. Only in the first nine months this has fallen by 31.8% to 25,000 million euros at the end of September. Only in the third quarter it has fallen by 1,200 million.

The operator has also maintained a liquidity of 22,606 million euros at the end of the third quarter, which allows it to have covered the debt maturities beyond 2024. In this sense, since January, refinancing for an amount of 5,407 million euros has been undertaken and the average life of the debt has been extended to more than 13 years compared to 10.79 years in December.

‘Solid’ behavior

The president of Telefónica, Jose Maria Alvarez-Pallete, Chairman of Telefónica, described the performance of the operator in the third quarter as “solid” and highlighted that “the rhythm of year-on-year revenue growth and OIBDA for the second consecutive quarter, with acceleration in service and B2B revenue growth ”. Pallete has considered that these results represent “a new significant step towards the economic and social recovery of the markets in which we operate, while the world continues to emerge from the worst effects of the pandemic.”

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